Abstract Selective hydrodeoxygenation (HDO) of biomass lignin‐derived phenolic compounds to aromatics is a demanding reaction. Oxophilic Ru based catalysts can catalyze direct deoxygenation but suffer from competing C−C hydrogenolysis to CH 4 at 350 °C and hydrogenation of phenyl ring at 250 °C under atmospheric pressure. In this work, a solid solution Ru 0.05 Ce 0.95 O 2 catalyst was hydrothermally synthesized, characterized and tested for HDO of m‐cresol. The Ru species is highly dispersed in the solid solution as isolated atoms and/or subnanometer clusters as a result of strong Ru−O−Ce interaction, and the catalyst shows high concentration of oxygen vacancies. In contrast to nonselective Ru/SiO 2 , Ru 0.05 Ce 0.95 O 2 selectively catalyzes deoxygenation to toluene while significantly inhibits C−C hydrogenolysis and hydrogenation. Moreover, the overall intrinsic HDO rate on Ru 0.05 Ce 0.95 O 2 is 2.2 and 8.8 times higher than those on Ru/CeO 2 and Ru/SiO 2 , respectively. The Ru−O V −Ce sites were proposed to be the active sites for deoxygenation. Inhibition of C−C hydrogenolysis and phenyl hydrogenation can be ascribed to the reduced size of the Ru ensembles due to the strong interaction in the solid solution.